Cullinan Therapeutics, Inc. Earnings Per Share Disclosure
During 2024, management identified an immaterial error related to the calculation and presentation of net loss per share attributable to Cullinan in prior periods. The Company had previously incorrectly concluded that the preferred stock had preferences over the Company's common stock and were therefore excluded from the calculation of basic and dilutive net loss per share attributable to Cullinan pursuant to the two-class method. The net loss per share attributable to common stockholders of Cullinan for 2023 was previously presented as $3.69 and as corrected is $3.21. Net loss per share attributable to preferred stockholders of Cullinan for 2023 was not previously presented and as corrected is $32.12. All related amounts have been updated to reflect the effects of the change due to this immaterial error throughout the consolidated financial statements and the notes thereto.
The Company computes net loss per share attributable to Cullinan for its common stock and preferred stock using the two-class method required for multiple classes of common stock. The two-class method is an earnings (loss) allocation method under which earnings (loss) per share is calculated for each class of common stock.
The following table sets forth the calculation of basic and diluted net loss per share attributable to Cullinan for 2024 and 2023 (in thousands, except per share data):
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2024 |
|
|
2023 |
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|
Common Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Preferred Stock |
|
||||
Numerator: |
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|
|
|
|
|
|
|
|
|
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Net loss attributable to Cullinan - basic and diluted |
|
$ |
(149,393 |
) |
|
$ |
(17,990 |
) |
|
$ |
(133,448 |
) |
|
$ |
(19,714 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding - basic and diluted |
|
|
53,771 |
|
|
|
648 |
|
|
|
41,550 |
|
|
|
614 |
|
Net loss per share attributable to Cullinan: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
$ |
(2.78 |
) |
|
$ |
(27.78 |
) |
|
$ |
(3.21 |
) |
|
$ |
(32.12 |
) |
Cullinan used the treasury stock method for equity awards and the if converted method for preferred stock to determine the number of dilutive shares outstanding in each period. The following table sets forth potential common shares that were excluded from the computation of diluted net loss per share attributable to common stockholders of Cullinan for 2024 and 2023 because their effect would have been anti-dilutive (in thousands):
|
|
2024 |
|
|
2023 |
|
||
Stock options |
|
|
8,989 |
|
|
|
9,418 |
|
Preferred stock |
|
|
6,475 |
|
|
|
6,138 |
|
Restricted stock awards and RSUs |
|
|
292 |
|
|
|
147 |
|
ESPP |
|
|
6 |
|
|
|
9 |
|
Total |
|
|
15,762 |
|
|
|
15,712 |
|
Quarterly Financial Information (Unaudited)
The immaterial error related to calculation and presentation of loss per share also impacted previously reported quarterly financial information. Net loss per share attributable to common stockholders of Cullinan for the three months ended March 31, 2024 as previously presented was $0.86 and as corrected is $0.75. Net loss per share attributable to common stockholders of Cullinan for the three and six months ended June 30, 2024 as previously presented was $0.75 and $1.61, respectively, and as corrected is $0.68 and $1.43, respectively. Net loss per share attributable to common stockholders of Cullinan for the three and nine months ended September 30, 2024 as previously presented was $0.69 and $2.30, respectively, and as corrected is $0.63 and $2.04, respectively. Net loss per share attributable to preferred stockholders of Cullinan was not previously presented. The corrected unaudited interim financial information for the three months ended March 31, 2024, the three and six months ended June 30, 2024, and the three and nine months ended September 30, 2024 are included in the tables that follow (in thousands, except per share data).
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Three Months Ended March 31, 2024 |
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Common Stock |
|
|
Preferred Stock |
|
||
Numerator: |
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|
|
|
|
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||
Net loss attributable to Cullinan - basic and diluted |
|
$ |
(32,287 |
) |
|
$ |
(4,861 |
) |
Denominator: |
|
|
|
|
|
|
||
Weighted-average shares outstanding - basic and diluted |
|
|
43,011 |
|
|
|
648 |
|
Net loss per share attributable to Cullinan: |
|
|
|
|
|
|
||
Basic and diluted |
|
$ |
(0.75 |
) |
|
$ |
(7.51 |
) |
|
|
Three Months Ended June 30, 2024 |
|
|
Six Months Ended June 30, 2024 |
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|
|
Common Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Preferred Stock |
|
||||
Numerator: |
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|
|
|
|
|
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|
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|
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|
||||
Net loss attributable to Cullinan - basic and diluted |
|
$ |
(37,605 |
) |
|
$ |
(4,423 |
) |
|
$ |
(69,940 |
) |
|
$ |
(9,236 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding - basic and diluted |
|
|
55,052 |
|
|
|
648 |
|
|
|
49,031 |
|
|
|
648 |
|
Net loss per share attributable to Cullinan: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
$ |
(0.68 |
) |
|
$ |
(6.83 |
) |
|
$ |
(1.43 |
) |
|
$ |
(14.26 |
) |
|
|
Three Months Ended September 30, 2024 |
|
|
Nine Months Ended September 30, 2024 |
|
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|
|
Common Stock |
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Preferred Stock |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to Cullinan - basic and diluted |
|
$ |
(36,508 |
) |
|
$ |
(4,052 |
) |
|
$ |
(106,513 |
) |
|
$ |
(13,223 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average shares outstanding - basic and diluted |
|
|
58,337 |
|
|
|
648 |
|
|
|
52,157 |
|
|
|
648 |
|
Net loss per share attributable to Cullinan: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
|
$ |
(0.63 |
) |
|
$ |
(6.26 |
) |
|
$ |
(2.04 |
) |
|
$ |
(20.42 |
) |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.